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Euro Price Forecast: EUR/USD Plunge Faces First Hurdle at Fresh Yearly Low

Euro Price Forecast: EUR/USD Plunge Faces First Hurdle at Fresh Yearly Low

Michael Boutros, Strategist

Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

  • Euro updated technical trade levels & sentiment – Weekly Chart
  • EUR/USD plunges nearly 3% off September high into critical support pivot
  • Weekly support 1.1569 (key), 1.1445; Resistance 1.1695 bearish invalidation ~1.1830s
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Euro is trading fractionally higher against the US Dollar into the start of the week with EUR/USD attempting to snap a four-week losing streak. Price is trading into a critical support pivot we’ve been tracking for months now and the focus is on possible price inflection off this threshold early in the month. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart heading into October trade. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.

Euro Price Chart – EUR/USD Weekly

Euro Price Chart - EUR/USD Weekly - Euro vs US Dollar Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview

Notes: In my last Euro Weekly Price Outlook(August) we noted that EUR/USD was approaching resistance objectives at, “the 38.2% Fibonacci retracement of the May decline at 1.1894- a region of interest for possible topside exhaustion IF reached. A close below 1.1695 would be needed to mark resumption of the broader downtrend with such a scenario exposing critical support at the 2019 & 2016 highs / the 100% extension of the yearly decline at 1.1570-1.1621.” Price briefly registered a high at 1.1909 before reversing sharply lower with Euro now trading within this key support pivot into the October open- watch the weekly close.

A break below this threshold could fuel another bout of accelerated losses for the Euro with such a scenario exposing the lower parallel / 2019 yearly open at ~1.1445- look for a larger reaction there IF reached. Initial weekly resistance now back at 1.1695 with breach / close above the median-line (currently ~1.1830s) needed to suggest a more significant near-term low is in place.

Bottom line: Euro has plummeted into support at a critical multi-year pivot zone into the start of the month. From a trading standpoint a good zone to reduce short-exposure / lower protective stops. Risk for some recovery here but rallies should be capped by 1.1694 IF price is heading lower on this stretch. Ultimately, a larger breakdown may offer more favorable opportunities closer to downtrend support. I’ll publish an updated Euro Price Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Euro Trader Sentiment – EUR/USD Price Chart

Euro Trader Sentiment - EUR/USD Price Chart - Euro Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at -2.09 (67.59% of traders are long) – typically bearish reading
  • Long positions are0.20% lower than yesterday and 8.38% higher from last week
  • Short positions are13.19% higher than yesterday and 7.13% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Trader are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed EUR/USD trading bias from a sentiment standpoint.

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Key Eurozone / US Data Releases

Eurozone / US Data Releases - EUR/USD Economic Calendar - Euro Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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